Internet

BuzzFeed, the Ad Model for the Facebook Era?


Matt Stopera

Photograph by Charlie Engman

Matt Stopera

On a Tuesday in February, Matt Stopera, a 24-year-old senior editor at a website called BuzzFeed, saw something hilarious on Twitter. It was an image from the archives of Sports Illustrated, circa 1991, of the diminutive TV nerd Urkel playing hoops with actor Will Smith and Indiana Pacer Reggie Miller. The next day at work, Stopera looked around the Internet for photographs in a similar spirit. He found one of Ginger Spice sitting at a bulky desktop computer and another of Arsenio Hall grinning at Bill Clinton, who was wailing on a saxophone. He arranged the photos on a single page, wrote a pithy caption for each one, and listed photo credits where he could.

At around 5 p.m., Stopera published “48 Pictures That Perfectly Capture the ’90s” on BuzzFeed. “These pictures are all that and a bag of chips!” he wrote at the top of the list. A BuzzFeed visitor with an appetite for ’90s nostalgia could scroll down, gawk at the 48 retro images, read the deadpan captions, recall Bob Saget, Tipper Gore, and Scottie Pippen, laugh at the crazy fashion, and resurface to the present day in a matter of minutes. It racked up 1.2 million page views.

At a time when massively popular Internet sensations often seem random—irreplicable one-offs such as “Kony 2012″—Stopera produces reliable hits. In recent months his blockbusters have included “25 Extremely Upsetting Reactions to Chris Brown at the Grammys” (2.5 million page views), “40 Things That Will Make You Feel Old” (3.2 million), and “the 45 Most Powerful Images of 2011″ (10.1 million). In terms of lasting cultural impact, Stopera’s recent run falls far short of, say, Phil Spector’s streak of Top 40 hits in the ’60s, or Brandon Tartikoff’s top-rated sitcoms in the ’80s. But there’s something about Stopera’s lists on BuzzFeed that calls to mind every bewildering pop-culture streak you’ve ever puzzled over. It suggests somebody has cracked a code.

Stopera joined BuzzFeed as an intern in August 2008. The site, which was less than two years old, aggregated upward-trending articles from publishing partners across the Internet to create a paperless tabloid newspaper. Stories about celebrity breakups, photo essays on Russian cheerleaders, prairie dog videos—whatever was on the rise with readers. There were only two other editorial employees. Stopera had spent his previous few months interning at an insurance company.

The key moment in his creative development, Stopera explains, took place in the spring of 2010 when Facebook rolled out its “like” button, which allowed readers to easily share the story they were reading, or the video they were watching, with their Facebook friends. “That was huge,” he says. Practically overnight, Stopera found his calling: inducing people to click that button.

These days every BuzzFeed article has several icons at the top and bottom of its articles, for sharing on StumbleUpon, Google Plus, and Twitter, among others. Users can also pass judgment on a story using BuzzFeed’s proprietary yellow reaction button system, which include “LOL,” “omg,” “wtf,” “fail,” and “ew.” Yet the Facebook button reigns supreme. “The way I do most of my posts,” says Stopera, “is I think, how can I get someone to press ‘like’ on this?”

Things that work, he says, are beautiful images, happy-looking animals, people reacting stupidly to world events on Twitter, numerical lists, funny auto-corrects, Ryan Gosling, corgis, outlandish Florida articles, and the apocalypse. Things to avoid: celebrity mug shots (stale from overuse), drug stories (too many moms and employers on Facebook), and protest signs. Stopera crafts his posts to be gender-neutral and emotionally engaging.

It sounds simple, but Stopera has an advantage others do not: BuzzFeed’s proprietary content management system, which is designed, managed, and constantly tweaked to encourage sharing on social networks. Using BuzzFeed’s analytics to catch up with content on the cusp of going viral, Stopera and BuzzFeed’s burgeoning staff have built a Web audience with 14.2 million monthly unique visitors, according to Quantcast. BuzzFeed won’t disclose dollar amounts, but the company’s president, Jon Steinberg, says it ran upwards of 100 ad campaigns last year. Those can gross, on average, $50,000 to $100,000 a pop. A conservative estimate—100 campaigns grossing $75,000—puts revenues in the $7.5 million range, or around $150,000 per employee in 2011.

Where some might see a shallow website shamelessly pandering quirky Facebook fodder, or “click bait,” to social networks’ lowest common denominator, Jonah Peretti, the site’s co-founder, sees a deep experiment in psycho-sociological theory, and a new business model he calls Social Publishing.

“What if you assume people’s home page isn’t your site but Facebook or Twitter or StumbleUpon, or one of these social sites?” says Peretti. “People come to your front page to find things for those services, as opposed to coming here to get everything. There’s a big opportunity.”

Peretti, who previously co-founded the Huffington Post, traces BuzzFeed’s origins to the 1990s, when media companies such as AOL (AOL) and Yahoo! (YHOO) grappled to become the dominant central portal around which consumers would orient their Web experience. With the subsequent rise of Google (GOOG), publishers such as About.com and Demand Media (DMD) bypassed the portals and competed to serve information directly to search engine users. Those companies were followed by the proliferation of portal-search hybrid publishers, like the Huffington Post, that combined a front-door portal experience fueled by aggressive news aggregation with a backdoor focus on search engine optimization.

Peretti says the growing centrality of Facebook in consumers’ digital lives has created the opportunity for the next leap forward. The new breed of social publishers like BuzzFeed, he explains, aren’t just aiming for search engine optimization, they’re pioneering social network optimization: sites designed technologically and editorially to cater directly to the growing number of people who organize their media consumption through a social network’s news feed. But for BuzzFeed to achieve Peretti’s ambitions, he will have to convince advertisers that what the site offers is substantially different, and more valuable than, the endless inventory of Web advertising space, which keeps online ad rates maddeningly low.
 
 
Peretti, 38, has a knack for coining clever Web neologisms. Among the keys to achieving success on the Internet, he says, is deploying “Big Seed Marketing,” optimizing “Viral Lift,” using a “Mullet Strategy,” and catering to the “Bored at Work Network.” He sees himself not only as a businessman but as something of an applied scientist, testing the theories of 20th century academic sociologists vs. the contemporary data of the social Web.

To understand some of the principles underlying BuzzFeed’s strategy, he recommends reading The Individual in a Social World, a 1977 book by Stanley Milgram, who is known, among other things, for his experiments leading to the six degrees of separation theory. “When some cute kitten video goes viral,” says Peretti, “you know a Stanley Milgram experiment is happening thousands of times a day.”

Peretti grew up in Oakland, Calif., graduated Phi Beta Kappa from the University of California at Santa Cruz in 1996 with a degree in environmental studies, and spent a couple of years teaching computers and Web publishing to high school students in New Orleans. After co-writing a number of papers for academic conferences (“Historical Role-Playing in Virtual Worlds: VRML in the History Curriculum and Beyond”), he matriculated at the Massachusetts Institute of Technology, where he earned a master’s degree from the Media Lab.

In 2001, inspired by reports of substandard working conditions at Nike (NKE) factories, Peretti ordered a pair of custom Nike sneakers decorated with the word “Sweatshop.” The company refused to fill the order, and Peretti got into a theatrical back-and-forth with a customer rep on e-mail. Afterward, Peretti e-mailed the document to 10 acquaintances, who passed it along to their friends. The whole thing snowballed. Overnight, Peretti became an Internet sensation. NBC flew him to New York to appear on Today.

Peretti walked away from the Nike affair a presumed expert on the explosive Internet phenomena now known as viral media. Writing about his experience for the Nation in April 2001, he theorized, “In the long run this episode will have a larger impact on how people think about media than how they think about Nike and sweatshop labor.” He speculated that by understanding the dynamics of “decentralized distribution systems and peer-to-peer networks,” new forms of social protest would emerge and challenge the “constellations of power traditionally supported by the mass media.”

In 2004, Kenneth Lerer, a public-relations executive turned venture capitalist in New York, recruited Peretti to help build a website, stopthenra.com, aiming to counter the influence of the National Rifle Association. (The site was eventually handed over to the Brady Campaign to Prevent Gun Violence.) About a year later, Lerer pulled Peretti into another project dreamed up by Democratic strategists. This time the idea was to build a liberal equivalent of the Drudge Report. Peretti signed on and, along with Lerer, Arianna Huffington, and the late Andrew Breitbart, became one of the co-founders of the Huffington Post.

Peretti oversaw the site’s technology. He proved particularly skilled at engineering content to appear at the top of search engine results. Over time, the Huffington Post’s superior search engine optimization became both a source of ridicule among competitors (who mocked the site’s relentless jockeying for, say, the top Google return to the question of what time the Super Bowl starts) and a major driver of its rapid growth.

In 2006, while still at the Huffington Post, Peretti started BuzzFeed with a small amount of seed funding courtesy of Lerer, who now serves as chairman. Peretti’s decision to start BuzzFeed grew out of a series of conversations he’d had with Duncan Watts, the principal research scientist at Yahoo, about the nature of influence and diffusion.

“Because of the complexity and randomness of networks and their importance in driving the spread of ideas, there’s a lot of unpredictability, both in terms of what succeeds and what helps it succeed,” says Watts, who serves as BuzzFeed’s science adviser. “He was interested in to what extent he could engineer things to go viral.”

In BuzzFeed’s early days, most of the site’s content was delivered via algorithm. Every day, its software scanned data from 100 partner sites, including the Huffington Post and AOL, detected articles that showed early signs of potential popularity based largely on how many times people were sharing them, then culled the most promising specimens. “We built a bunch of little things that aren’t even part of what we do now,” says Peretti. “But they were all around this theme of why do people share things, how do people share things, and can you detect when something is about to take off before it does?”

BuzzFeed currently earns all of its revenue from branded content—a form of advertising in which corporations create story-like units that live among a publisher’s editorial products and share the same underlying aesthetic, tone, and technology. Recent clients have included Kraft Foods (KFT), Dell (DELL), and McDonald’s (MCD).

BuzzFeed President Steinberg says branded content revenues tripled in 2011. Lerer adds that BuzzFeed was profitable for some months in 2011, but that on the heels of its latest round of funding (the company recently closed on $15.5 million from a handful of venture capitalist firms), the business is spending more than it’s taking in. “I doubt that we’re going to be profitable this year,” he says. “There will be plenty of time, hopefully, to make a lot of money. Right now we’re investing.”

What they’re investing in is more expensive than what they’re used to. In December, BuzzFeed surprised political journalists by hiring Ben Smith, one of Politico’s top writers, to serve as the site’s new editor-in-chief. Smith has since launched political and technology categories, staffed by a growing crop of reporters, charged with writing original stories a bit deeper than “31 Crazy Potato Chip Flavors.” They have since introduced sections devoted to sports and women’s issues. In February, BuzzFeed editors announced that they had hired Michael Hastings, author of The Operators: The Wild and Terrifying Inside Story of America’s War in Afghanistan, whose reporting for Rolling Stone in 2010 led to the resignation of General Stanley McChrystal. In March, BuzzFeed published a photo essay by Marc Ambinder, the former White House correspondent for the National Journal, titled “Secret Armies: An Exclusive Look at 10 Secret U.S. Forces.”

“It used to be that Facebook would tell you news about your friends,” says Peretti. “And then people started sharing cute kittens and humorous content. Now, increasingly, everything is in your feed, including reporting and substantive content. We realized that as this transition happened, we needed to encompass the full range of things that show up in your Facebook and Twitter feed. That means having reporters who have sources who are able to get information and break news and help tell our audience things they didn’t know before.”
 
 
BuzzFeed’s top advertiser is General Electric (GE). One of GE’s branded-content campaigns featured brief “factory flyover” videos of GE-built power plants shot from a helicopter. Once the ads appeared, BuzzFeed and GE commissioned a study from the analytics company Vizu measuring consumers’ sentiment toward GE, depending on how they were exposed to the ads. The study found that people had a higher opinion of GE if they happened upon the videos through a shared link on a social network than if they saw it directly. “We all understand that if our friend—or a community we are a part of—shares something with you, you’re going to accept it and embrace it differently than if it were through paid placement or if you happened to stumble upon it,” says Paul Marcum, director of GE’s global digital marketing and programming.

Peretti now uses the study to support his sales pitch that BuzzFeed’s style of branded content results in significantly greater brand affinity than traditional banner ads or, for that matter, traditional print and broadcast ads. BuzzFeed executives call this concept Social Brand Lift. Peretti says the GE study demonstrates that social publishers such as BuzzFeed help advertisers make a stronger impression. The study’s conclusion also confirms the theories put forth by the academics Elihu Katz and Paul Lazarsfeld in their 1955 book, Personal Influence, another of Peretti’s touchstones.

One central theory of Katz and Lazarsfeld’s dense book is that mass media messages don’t shape personal opinion directly, but tend to work through the activity of key intermediaries—people who exist in every social and economic group and exert a disproportionate amount of influence in disseminating messages to friends, co-workers, relatives, and neighbors. Katz and Lazarsfeld named this model the “two-step flow of communication” and called the key information diffusers “opinion leaders.” Peretti calls them “Supersharers.” The Supersharer “is someone who has a high activity level,” says Peretti. “They see stuff, share it, and pass it around. They think of themselves as the disseminators of content, and they’re not in the media business.”

BuzzFeed executives describe their site as a magnet for Supersharers, and cite an internal study which found that 80 percent of those who visit BuzzFeed arrive looking for content to share. The result, according to research cited in BuzzFeed’s sales pitch, is that branded content on the site benefits from a quantifiable surge in multistep message diffusion. Among Peretti’s arsenal of buzzwords is a metric he’s adopted comparing paid impressions to views of the branded content generated by social sharing. He calls it Viral Lift. “For the social world, Viral Lift is a better metric than something like click-through rates,” says Peretti.

Peretti’s cleverness tends to obscure one of the basic challenges facing BuzzFeed: Will pulling in large numbers of fly-by users from Facebook prove to be a better business than pulling in large numbers of fly-by users from Google? One of the long-standing problems for publishers hoping to sell advertising against Google traffic is that people who arrive via search engine often have a specific need. Once that need is satisfied, they often bounce back to Google rather than stay and roam around the publisher’s site. The result is a brief amount of exposure to the advertiser’s message.

Social publishers face similar challenges. In the spring of 2011, Outbrain, a New York-based Web engagement company, conducted an analysis of 100 million visits to the websites of 100 publishers, including USA Today, AOL, and the Chicago Tribune. It found that 41 percent of the outside views to a publisher’s site originated from search engines and 11 percent from social networks. As it turned out, on average, visitors coming from social networks spent even less time on the publisher’s site before bouncing away—back to, say, their Facebook news feed or Twitter stream—than new visitors from search engines.

It’s not hard to imagine why. Social media users face a constant stream of information competing for their attention. When they see something they want, they’re happy to follow a link off site. But once they’ve consumed the publisher’s article or video or photo collage, gravity pulls them back to their Facebook news feed or Twitter stream. The Outbrain study suggests that social media traffic might be worth even less to brand advertisers than traffic from search engines.

Peretti argues that the amount of time spent on a site is an increasingly outdated measure of value. “The reason that time on site has been so important is because advertising hasn’t worked very well,” he says. “You need someone to view 100 million pages with your banner ad on it before it has any effect.” By contrast, says Peretti, an effective social publisher doesn’t need much of a user’s time. The branded content is designed to follow the users back into their Facebook news feeds via the same route as Stopera’s photo collections—the Facebook “like” button, primarily. BuzzFeed has a team of six who work with a corporation’s marketing department or ad agency to come up with branded content that works with BuzzFeed’s technology and editorial sensibility. It’s a nascent craft. “We have a very long-term view,” says Peretti. “The shift has happened a little bit faster on the editorial and content side, and now it’s starting to break on the advertising side.”

Due to BuzzFeed’s empirical and flexible approach—what scientific adviser Watts calls “Measure and React vs. Predict and Control”—things on the site that demonstrate likability with Facebook sharers often reappear in slightly mutated forms. A few weeks after Stopera’s ’90s-inspired photo collage, another picture of Urkel appeared on BuzzFeed, this time in a piece of branded content by McDonald’s called “Dance Crazes Across the Ages.”

The post consisted of 10 images and extended captions highlighting “dance crazes” of yesteryear, ranging from “The Pee-Wee Herman” in the ’80s to “The Urkel” in the ’90s to “Shamrocking” in 2012. “While all those other novelty dances are nice, it’s all about #Shamrocking now,” read the post. “For those of you who don’t know, #Shamrocking is when you buy your friend a Shamrock Shake from McDonald’s and take a picture of them doing an Irish Jig because they’re so happy.” To date, “48 Pictures That Perfectly Capture the ’90s” has racked up 35,000 shares on Facebook. McDonald’s Irish Jig has racked up 4.

Despite the challenges, Peretti continues to sign up major advertisers—including one improbable client. In 2011, BuzzFeed published a series of branded posts by Peretti’s former viral-sparring partner Nike, including “The Fifteen Best Running Songs” and “The 10 Most Beautiful Places to Go for a Run.” There was no mention of sweatshops.
 
Buzzfeed’s Top 10 From March 20:
 
1. Rick Santorum Shirtless
2. Republicans Mock Obama Documentary With Fake Movie Poster
3. “Kony 2012″ Director Arrested for Public Masturbation
4. The Aging of a Rock Star
5. 42 Puppies You’ll Want to Take Home With You
6. 12-Year-Old Speaks the Truth About Plain Doughnuts
7. The Five Weirdest Stories of 2012 All Happened in One Day
8. The Best Use of Facebook Timeline Yet
9. The 15 Best Twitter Reactions to Peyton Manning Replacing Tim Tebow in Denver
10. Jennifer Lopez’s Stunt Double Is a Man

Gillette_190
Gillette is a staff writer for Bloomberg Businessweek in New York.

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